Commence The Witch Hunt

So Congress has called back the oil executives before their Mighty High-rise Desk of Deference to remind those greedy bastards of their place in the world. After all, the U.S. Government gives them some fucking table scrap tax credits. So why are gasoline prices at $4 a gallon?

Sweet. I cannot wait for the grand standing of our most desperate elected officials trying to score quick political points with people dumb enough to think this constitutes intelligent leadership, a.k.a. Independents.

Here’s a sweet idea. The oil executives should walk in and say something along the lines of “Hey, you’re right, take away the tax credits.” Nip this fucking thing in the butt right now, before it is permitted to become a penny show of cheap whores, like the kind your great-grandfather used to sneak into when he was fourteen.

I am in a very sour mood right now, so pardon me if I’m a little short. You see, I absolutely nailed this call on the dollar rally. I’m not going to take the time to link the post; just get your lazy ass up and start walking backwards until you find it.

Yet, I completely hosed myself, taking up this position in SLV thinking, “hey, 30% is the sizable correction I was waiting for.” Now I find myself blowing up my own wisdom with expedient decision making.

Apparently, you all will not be satisfied with such a drop. Silver must become so cheap that it will replace plastic as our go to material of choice. My children will suckle on silver pacifiers, because ones made from petroleum are “health hazards, and so damn expensive.”

I’m going to wait it out a little longer. Some part of me still believes I made the right move last week. For Christ’s sake, no action has even been taken to strengthen the currency yet! The dollar has really only rallied because literally no one believed in it. I can see us careening downward if actual steps were taken to shore up the dollar. Hell, maybe even if steps were taken to preserve it.

None of that has even happened yet. It’s just a looming possibility somewhere over the horizon.

I will abide a little longer, yes. But I don’t like the feeling in my stomach. No not at all…

I should have taken my own warning a little more seriously, it seems.  The dollar is cutting through its opposition like a well made ginsu knife, or Damascan sword.  Meanwhile, thanks to an early and quick mobilization into the silver market, I find myself without a single real dollar to spare – precisely where I did not want to be.  Alas!

I added to my SLV position back above $36 (it’s printing below $35 as I type).  It seems that was also an imprudent decision.  I will refrain from moving too much more, so as to attempt to float on the quick sand.

I am already down more than 3% today, but am strangely unfazed by the whole affair.  If we continue to see a complete melt down of the entire market, perhaps I will hedge.  Or, maybe, I will just bleed red until the market bottoms.

I am not, after all, a fund of any kind.  I am only Cain Hammond Thaler, and I’ll not be held responsible if I should lose every cent I hold.  There is no one to withdrawal my managed money from under my jurisdiction.  It seems to me that the best thing to do right now is remain steadfast and dilute steadily with new money coming in, until I see a clearer path than what’s before us; the fruits of my labor can abate my condition yet.

To each their own friends.  Good luck to you; storms on the open Ocean are never navigated with complete confidence.  I’m holding fast, but I won’t belittle you if you should choose to try and exit.

I ended the day up 1.88%.

Silver’s continued rebound was, interestingly enough, not even in the top three gaining positions in my portfolio today.  It barely outperformed AEC.

In ascending order, my biggest gains came from:

MGM: +1.84%

CLP: +2.16%

WNR: 3.15%

And the biggest gainer today in my portfolio is…

AWK: +3.27%

That’s right, a water utility company already paying me 4% a year in dividends was up more than any other position I own today.

Allow us to a take a trip together, down the hollowed corridors of memory.

The Next Things

In this post above, I distinctly detailed out my new rotation and succinctly tried to explain why I was interested in the places I was.

And actually, I better laid out the advantage of switching over to utilities at the beginning of the year, back when I was posting in the Peanut Gallery. 

Utilities Will Be The New Municipal Bonds

Although I was very specific about municipal debt being rolled over into the utility sector, I unintentionally hit the broader point then: money at risk needs somewhere to go.  I reiterated several times after then, utilities are cheap, for how stable they are.

Today, massive quantities of money found utilities, AWK included (I would say especially, it was a front runner).  Why do you suppose that is?

I’ll give you a hint; the answer has more to do with where you don’t want to put your money than where you do.

The recovery in silver and oil not withstanding, things are dangerous right now.  Silver is recovering because men oversold it without thinking.  But I will be out of SLV quickly, once it crosses back to fair value, somewhere north of $40.

It is still the time to be thinking about safe assets.  It is still the time to respect the U.S. dollar.

I’ll leave you with a thought:

AWK (1 Year)

After swearing I would cease and desist from all margin “cokey” related behavior, I made myself a liar once again today by running into single digit margin territory after buying a stake in WNR (PPT and Twitter time stamped).

I’ve liked the idea of capitalizing on the refinery spread since the Fly brought it up, but I just couldn’t bring myself to follow along at the time, for whatever reason.  I figured I’d just sit it out and watch you all run to grand profits without me.  But, fate was far kinder to me than that, and so I purchased my position at an average cost of $16.68.  Hopefully now I can partake in only the enjoyable sensations of owning the company.  I haven’t envied you holders of the name up until now; no not one bit.

Meanwhile, silver rebounded significantly higher today, as short sellers got their balls crushed between two ingots of the metal; agreeably, as they rightfully deserve.  Another 60 cents to the price of SLV (2%) and I break even.  I make an additional 10% for every move of roughly $3.50 per ounce equivalent of SLV.  I hope certain National Health Systems are paying attention.

For the day, I was up 3%, thanks to magnificent decision making and prudent selection of stocks and sectors.

Saying Carlos Slim is short silver is like saying Exxon Mobile is short gasoline, because sometimes they lock in superior pricing.

I must say with the utmost sincerity, that if you are one of the people spreading this nonsense, then you are an ignoramus of the highest caliber, and deserve to be euthanized, promptly.  Indeed, the egregiousness of such a suggestion is nearly beyond parallel.

In addition, how is it that with a straight face you can claim the collapse in silver is completely justified, to the extent that silver should now continue to retrace back to a price of single digits.

May I remind you, buying silver as it were a fad for the regular “common Joe” was only begun the winter past.  Before that, the popularity of the silver trade was still very much muted and limited to the dedicated few.  As such, a retracement of much below $30 is completely unwarranted, given that some of silvers upside between then and now (a time of QE II) was vindicated.

While I myself am warming to the dollar trade (a truth recognizable by the cash position I had on my books until just yesterday), to sit here with a straight face a say that a 30% crash in three days in such an entity as the commodity markets is called for and not the product of external manipulation; especially in the presence of just such observable and obvious manipulation as raising the margin requirements such a gargantuan amount; is hokum.

It is blatantly obvious that such a drop in price is the cause of a massive sell out, and here we have an obvious culprit in the form of forced margin sales, and so you, the ever vigilant detective, are out digging through trash cans looking for the murder weapon. 

Surely, it must be those dastardly mom and pop types who got in over their heads!  It was them all along!  Now silver to $0!!

The weapon is still smoking in the hand of the shooter.  Quite being dumb and stop shorting the silver market on “the new normal.”

While I will concede to you that $50 an ounce in such a short order was perhaps extreme, if you think the price right now is fair, then I would beckon you to recall:

The price of silver was only about $3 lower than where it is now when I made my own major sales back in December.  And that was how many billions of dollars of Fed pumping ago?

But no!  I’m sure you know what you’re doing.  Silver is just the most useless most absolutely necessary metal in the world today.

I will eat your liver by Friday of next week…

“Know when to back off”

Alexander of Macedon, who’s conquests earned him the title Alexander the Great, is arguably the greatest military strategist in history, when factoring in the advancements and innovations he contributed to warfare over the course of his rather spectacular and equivalently short lifetime.

His ideas and tactics are still studied to this day by aspiring military commanders; such was the effectiveness of his plans and methods that relevance can still be found in the more abstract concepts he employed.

But perhaps the simplest and most useful teaching of Alexander can be found in the Battle of Gaugamela.

The layout of the battle was as follows: Alexander and his army of perhaps as many as some 50,000 Macedonians met the army of Darius III, leader of the Achaemenid Empire, and his army of 100,000. Outnumbered two to one, Alexander and his commanders were forced to come up with strategy to level the odds.

During this particular battle, it is said Alexander came up with many legendary techniques that utterly changed the face of warfare, including formations that rendered the use of chariots ineffective and the first instance of the echelon formations being employed.

More, during the battle itself, Alexander performed a brilliant feint, riding with his cavalry towards the outermost part of the battlefield, splitting Darius’ forces into two distinctive groups, with a gap formed in the middle where the phalanx echelon was battling. It was then that Alexander reversed his course and drove his 7,000 heads directly into the newly formed weak spot, aiming directly for Darius himself.

The end result was total confusion on the part of the enemy army, as their forces were split and their leader was being born down upon. The ranks began to break and Darius and his entourage began a retreat.

And it was then that Alexander made his most brilliant decision of the day.

He called off the attack.

To understand why, you can’t look ahead of Alexander, where Darius awaited to be slain with presumable victory. You must look behind Alexander, to where the main body of his force was growing weary and one of his most trusted generals, Parmenion, was in danger of falling. Alexander realized that to press his attack would simultaneously be risking his own army and, by extension, his own wellbeing.

Returning to the aid of his main force, they began to sweep up the remnants of the Persian’s who had stayed behind, sealing a decisive victory for the Greeks.

Darius himself would never meet Alexander on the field of battle again. Such were his losses, in both men and credibility, that his empire was torn in two, and shortly thereafter he was slain by the hand of one of his own commanders.

The great lesson is very straightforward. Restraint can often lead to the desired victory, while pursuit of victory can just is easily lead to defeat.